Ask an expert: More money and lower prices?
MSN Money's Anthony Mirhaydari discusses why inflation has remained tame even while the Fed continues to pump cash into the economy.
In the video below, MSN Money's Anthony Mirhaydari discusses why, even while the Fed continues to pump money into the economy, prices are falling. What might this mean for the economy, and what should investors do in this climate?
According to economists and policy experts, printing money causes inflation -- that is, higher prices of goods, services and eventually wages. And since the 2008 economic and financial crisis, the Fed has pumped trillions of dollars into the economy -- first by lowering interest rates in 2007 and then through asset purchase programs and other methods.
Inflation, though, hasn't roared in as many have feared. There haven't even been signs of inflationary pressures. Instead, food, gas and commodity prices are declining.
Mirhaydari explains why this might be happening and which markets are signaling that prices might come down even further. He further delves into the dangers of falling prices on the economy. Finally, Mirhaydari has some investment recommendations.
The discussion about the Fed's policies, prices and the economy continues over at MSN Money's Facebook community.
MSN Money on Twitter and Facebook@msn_money and @topstocksmsn
More from Top Stocks
First... stated food and gas prices are rising. Gas is $3.89.9 at my Kroger and Ground Hamburger is $3.69/pound.
Second... Bernanke has been putting $85 billion a month in unsubstantiated fake dollars into the markets since 2009. That's more than a half TRILLION now. Add in all that crap credit his banks have written and he has bought, and we are TRILLIONS deep in a stinky mess. Every dollar of it dilutes or weakens the consumer's buying power. So... if our dollar buys less and prices have risen... inflation is not only out of control but there are fewer people working, earning and paying taxes to offset it. The markets are golden and the shareholders in it haven't used those windfalls for good purpose. Like it or not... we either Eat the Rich to balance this or they give it back. Sharpen your knives and forks folks... greedy people do not give in until they are on the spit and can smell their own skin crisping up. Ben Bernanke is the Enemy of the Entire World. WORST criminal EVER.
The exact problem of attempting to include Food or Energy cost into inflation, is based on volitility..
Whereas by Regions or Seasons, what can a study use for a base....??
John buys gas @ $3.59 p/g........600 miles away; Henry buys gas @ $4.01 p/g.
Which price or factor do you use ??.....A difference of approximately 10%.
This can happen within a State less than 100 miles apart or even greater discounts that do come into play...Sometimes as much as 25%, for various reasons or pricing.?
Mary and/or Sally go to the Grocery store to get Apples or Potatoes...
Mary gets Apples (in apple country) @ 5 for $1....Sally gets hers(elsewhere) for 4 per $1.
A difference of 25% or 20% depending on calculation..?
Sally buys potatoes @ $4.59 per 10 pounds...Mary buys her potatoes 2 months later(in season) @ $2.50 per 10#s....A difference of about 21 cents per pound or $2.09....Go figure.
Then try and figure inflation on all these above prices...??
The velocity of M1, M2, and MZM has already proven that the FEDS have failed miserably in providing any real relief for most Americans. At the end of the DAY, stubbornly high New Home and CAR prices are THE real factors. Stubbornly high Used Care prices and record high Rental Prices are the real factors. The effects of continually paying higher prices for a 4 year period for gasoline, is a major factor throughout the economy.
Does the Rate of Change account for the rate of change folks now face when most of today's tech fails far more quickly. Does it account for the huge rise in Repair Costs for fixing equipment that fail far too quickly compared to historical standards? Bottom-line, don't use standards that really don't apply to the Real America.
See this chart: http://tinypic.com/r/2wqeqdk/5
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
As geopolitical tensions threaten to spin out of control, investors are wondering how best to position their portfolios for the global turmoil.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.